Nardino v. Credit Control, LLC, CV 17-03772 (ADS) (AKT)

CAROLINE NARDINO on behalf of herself and all others similarly situated, Plaintiff, v. CREDIT CONTROL, LLC, Defendant.

CV 17-03772 (ADS) (AKT)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK

March 26, 2019

REPORT AND RECOMMENDATION

A. KATHLEEN TOMLINSON, Magistrate Judge:

I. PRELIMINARY STATEMENT

Plaintiff Caroline Nardino ("Plaintiff") commenced this lawsuit on February 3, 2017 in the Supreme Court of the State of New York, County of Suffolk, by filing a Summons with Notice against debt-collector Defendant Credit Control, LLC ("Credit Control" or "Defendant"). See Summons with Notice, Index No. 602192/2017 ("Summons") [DE 1-1]. Defendant removed the action to this Court on June 22, 2017. See Notice of Removal [DE 1]. Thereafter, on June 26, 2017, Plaintiff filed a formal Complaint on behalf of herself and all others similarly situated. See Complaint ("Compl.") [DE 6]. Plaintiff alleges that Defendant violated the Fair Debt Collection Practices Act ("FDCPA"), 15 U.S.C. § 1692 et seq., based on abusive, deceptive, or misleading debt collection practices in connection with a debt collection letter which Defendant sent her about a purportedly outstanding debt (the "Collection Letter"). See generally Compl. The Collection Letter is attached to the Complaint as Exhibit A. Plaintiff originally asserted six causes of action, the third of which alleges that the Collection Letter did not properly identify the creditor or the entity on whose behalf Defendant was attempting to collect the debt. Compl. ¶¶ 29-30.

On April 30, 2018, Plaintiff withdrew all but one of the claims and moved for class certification, pursuant to Fed. R. Civ. P. 23. See Plaintiff's Motion for Class Certification ("Pl.'s Mot. for Class Cert.") [DE 21]. The third cause of action is the only claim remaining in this case. In it, Plaintiff asserts that the Collection Letter did not properly identify the creditor, in violation of 15 U.S.C. § 1692e, 1692(e)(2)(A) and 1692e(10). The Defendant opposed Plaintiff's Motion on May 18, 2018 and cross-moved to dismiss the Complaint for lack of standing. See Defendant's Cross-Motion to Dismiss ("Def.'s Cross-Mot. to Dismiss") [DE 23]. Plaintiff opposed the Cross-Motion and attached an affidavit signed by Plaintiff's bankruptcy attorney, Richard Jacoby, Esq., which attempts to explain the reasons why Plaintiff did not disclose her FDCPA claims in her Chapter 7 petition. See Plaintiff's Opposition to Defendant's Cross-Motion to Dismiss ("Plaintiff's Opp'n. to Cross-Mot.") [DE 25]; see also May 31, 2018 Affidavit of Richard Jacoby, Esq. ("Jacoby Aff.") attached as Exhibit 1 to Pl.'s Opp'n to Cross-Mot. [DE 25-1]. Defendant then moved to strike the Jacoby Affidavit, arguing that the Affidavit contains inadmissible hearsay. See Def.'s Mot. to Strike [DE 27]. Judge Spatt referred the pending motions to this Court for a Report and Recommendation. See September 10, 2018 Referral Order [DE 36]. For the reasons which follow, this Court respectfully recommends to Judge Spatt that (1) Defendant's Motion to Strike be DENIED, (2) Defendant's Motion to Dismiss be GRANTED, and (3) Plaintiff's Motion for Class Certification be DENIED as MOOT.

II. BACKGROUND

On or about February 3, 2016, Defendant sent Plaintiff the Collection Letter stating that the letter "is from a debt collector and is an attempt to collect a debt." Compl. ¶ 7 and Ex. A [DE 6-1]. The Collection Letter shows a balance of $607.25 due and owing to Kohl'sDepartment Store, Inc. ("Kohl's") on Plaintiff's Capital One credit account. Compl. ¶ 9. It lists Kohl's as Defendant's client and Capital One as the original creditor. Id. and Ex. A.

The following month, on March 7, 2016, Plaintiff filed a Chapter 7 Bankruptcy Petition in the United States Bankruptcy Court for the Eastern District of New York. See Pl.'s Mot. for Class Cert. at 4; see also Declaration of Mitchell L. Pashkin, Esq. ("Pashkin Decl.") [DE 21-2] attached to Pl.'s Mem. of Law in Support of Mot. to Certify Class ("Pl.s' Mem.") [DE 21-1] ¶ 4; Pashkin Decl., Ex. D. A copy of Plaintiff's Voluntary Petition for Bankruptcy is attached to the Pashkin Declaration as Exhibit D. The form petition completed by the Plaintiff contains multiple sections directed to various aspects of the petitioner's financial condition. Specifically, Official Form 106Sum - "Summary of Your Assets and Liabilities and Certain Statistical Information" - asked Plaintiff for information concerning, among other things, any property, liabilities, income and expenses, taxes, loans, etc. See Pashkin Decl., Ex. D at 8-9. The first sub-category under Form 106Sum is "Schedule A/B: Property" which is a five-page compilation of questions to be answered about the Plaintiff's assets. Id. at 10-14. Questions 33, 34 and 35 of Schedule A/B appear as follows:

33. Claims against third parties, whether or not you have filed a lawsuit or made a demand for payment

Examples: Accidents, employment disputes, insurance claims, or rights to sue

¦ No

? Yes. Describe each claim.........

34. Other contingent and unliquidated claims of every nature, including counterclaims of the debtor and rights to set off claims

¦ No

? Yes. Describe each claim.........

35. Any financial assets you did not already list

¦ No

? Yes. Give specific information..

The document reflects that Plaintiff responded "No" to each question.

On April 14, 2016, the bankruptcy trustee assigned to Plaintiff's petition, Kenneth Kirschenbaum, issued a Report of No Distribution, indicating that Plaintiff possessed no distributable assets. See April 14, 2016 Electronic Entry on EDNY Bankruptcy Court DocketSheet, attached as Ex. G to the Pashkin Decl. Thereafter, on June 15, 2016, relying on the Report of No Distribution, the Bankruptcy Court entered an Order of Discharge and Final Decree, releasing Plaintiff from liability for certain debts and closing Plaintiff's bankruptcy case. Pashkin Decl., Ex. E.

Notably, during the pendency of Plaintiff's bankruptcy proceeding, Plaintiff did not amend her petition to disclose any potential legal claims. Nevertheless, following the June 15, 2016 Order of Discharge and Final Decree, Plaintiff filed three lawsuits, culminating with this litigation. Plaintiff commenced the first action on October 4, 2016 against Collins Asset Group, LLC in connection with a January 22, 2016 debt collection letter. See Eastern District of New York CM ECF System, Nardino and Vouvounas v. Collins Asset Group, LLC, CV 16-05532 (JMA). That case settled early on in the proceedings. Almost four months after Plaintiff brought the Collins action, she commenced another litigation in the Eastern District on October 7, 2016 against FBCS, Inc. and CKS Financial, LLC in connection with a February 3, 2016 debt collection letter. See Nardino v. FBCS, Inc. and CKS Financial, LLC, CV 16-5626 (LDW). Within six weeks and prior to any answer being filed, that case was voluntarily dismissed.

With respect to the instant litigation, Plaintiff originally filed a Summons with Notice in the Supreme Court of the State of New York, County of Suffolk, against Credit Control, LLC. Defendant removed the case to the federal court for the Eastern District of New York on June 22, 2017. See DE 1 and 1-1. Plaintiff's counsel thereafter filed an actual Complaint on June 26, 2017 and presented this case as a putative class action, asserting class allegations pursuant to Fed. R. Civ. P. 23. See Compl. ¶¶ 42-49 [DE 6]. The Complaint alleges various violations of the FDCPA in connection with debt collection letters which Plaintiff received prior to filing for Chapter 7 relief in the Bankruptcy Court.

Plaintiff now seeks to certify the class to include, inter alia, persons to whom Defendant sent collection letters from February 3, 2016 to the present, seeking to collect a past due debt. See id. ¶ 43(I), (III). Defendant contends that before the Court reaches the merits of Plaintiff's motion for class certification, it must dismiss the matter because Plaintiff lacks standing to pursue her claims insofar as she failed to disclose them in her bankruptcy proceeding.

III. DISCUSSION

Because Defendant's Motion to Dismiss implicates the Court's subject matter jurisdiction, the Court will first address the issues of standing.

A. Subject Matter Jurisdiction

1. Standard of Review

"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Roth v. Solomon & Solomon, P.C., No. 17-CV-0868, 2018 WL 718402, at *2 (E.D.N.Y. Feb. 5, 2018) (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)). In resolving a motion to dismiss for lack of subject matter jurisdiction, the Court may refer to materials outside the pleadings. See Morrison v. Nat'l Austl. Bank, Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff'd, 561 U.S. 247 (2010) (citing Makarova, 201 F.3d at 113); Samele v. Zucker, 324 F. Supp. 3d 313, 321-22 (E.D.N.Y. 2018). "Though the Court must accept the factual allegations contained in the [Complaint] as true, it will not draw argumentative inferences in favor of Plaintiff; subject matter jurisdiction must be shown affirmatively." Roth, 2018 WL 718402, at *2. It is Plaintiff's burden to establish that she has standing, and, by extension, that subject matter jurisdiction exists. See Romeo v. FMA All., Ltd., No. 15-CV-6524, 2016 WL 3647868, at *4 (E.D.N.Y. June 30, 2016) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)).

2. Applicable Legal Principles

a. Debtor's Duty to Disclose

"In general, the price of a discharge in bankruptcy is high, and the disclosure requirements of the Bankruptcy Code and Rules are onerous indeed." Romeo, 2016 WL 3647868 (quoting In re Arana, 456 B.R. 161, 169 (Bankr. E.D.N.Y. 2011)) (internal quotation marks omitted). "In this regard, pursuant to 11 U.S.C. § 521(a)(1), a debtor seeking the benefits of bankruptcy is under a duty to disclose . . . all of his or her interests...